Principles of Economics (MindTap Course List)
8th Edition
ISBN: 9781305585126
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 9.2, Problem 2QQ
To determine
The impact of international trade on total surplus.
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Students have asked these similar questions
Use Supply and Demand graphs to support your answer in each of the following cases:
A: What happens to consumer, producer and total economic surplus when we import a good?
B: What happens to consumer, producer and total economic surplus when we export a good?
C: What happens to consumer, producer and total economic surplus if we impose a tariff on imports?
D: What happens to consumer, producer and total economic surplus if we impose an export duty (tax paid by the producer) on exports.
Use Supply and Demand graphs to support your answer in each of the following cases:
A: What happens to consumer, producer and total economic surplus when we import a good?
B: What happens to consumer, producer and total economic surplus when we export a good?
C: What happens to consumer, producer and total economic surplus if we impose a tariff on imports?
D: What happens to consumer, producer and total economic surplus if we impose an export duty (tax paid by the producer) on exports.
Do D
For answers for A, B and C - https://www.bartleby.com/questions-and-answers/use-supply-and-demand-graphs-to-support-your-answer-in-each-of-the-following-cases-a-what-happens-to/83ac814e-a7b7-43aa-90ca-ef02bf2da559
The United States represents a small part of the world orange market.
Draw a diagram depicting the equilibrium in the U.S. orange market without international trade. Identify the equilibrium price, equilibrium quantity, consumer surplus, and producer surplus.
Suppose that the world orange price is below the U.S. price before the trade and that the U.S. orange market is now opened to trade. Identify the new equilibrium price, quantity consumed, quantity produced domestically, and the quantity imported. Also, show the change in the surplus of domestic consumers and producers. Has domestic total surplus increased or decreased?
Chapter 9 Solutions
Principles of Economics (MindTap Course List)
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- Show graphically that for any tariff, there is an equivalent quota that would give the same result. What would be the difference, then, between the two types of trade barriers? Hint: It is not something you can see from the graph.arrow_forwardSuppose the following figure shows the domestic market for hockey sticks in a certain country. Thegovernment has recently imposed tariffs on hockey sticks. While the world price of a hockey stick is$60, the price in this country (with the tariff) is $75. a. How did the quantity of imports change when the government imposed a tariff?b. How much does the government earn from the tariff?c. How does the value of consumer surplus change after the tariff is introduced?d. How does the value of producer surplus change after the tariff is introduced?e. What is the value of the deadweight loss from the tariff?f. What is the value of social surplus after the tariff? How will social surplus change if the tariff iseliminated and the price of hockey sticks falls to the world price?arrow_forwardThe graph shows the domestic demand and domestic supply for soybeans. Assume this country is open to international trade, that soybeans are a perfectly competitive good, and that the world price of soybeans is $30.(look at image) Suppose a tariff of $10 is imposed. What price will result in this country? $_____ After the tariff is imposed, how many units of soybeans will be imported? ______ unitsarrow_forward
- Suppose the nation of Isoland is an importer of textiles and is looking for a way to raise government revenue. The following graph shows the effect of a tariff on textile imports.arrow_forwardAssume that you are consulting with a small country that imposes a tariff on a product that it produces. Ask the decision makers of the country to identify the incorrect statement from the ones below: They will have a consumer surplus decline. They will have a decline in producer They will have a decline of the quantity Their total fall in surplus will be more than their deadweight loss.arrow_forwardConsider the Colombian market for soybeans. The following graph shows the domestic demand and domestic supply curves for soybeans in Colombia. Suppose Colombia's government currently does not allow international trade in soybeans. Use the black point (plus symbol) to indicate the equilibrium price of a ton of soybeans and the equilibrium quantity of soybeans in Colombia in the absence of international trade. Then, use the green triangle (triangle symbol) to shade the area representing consumer surplus in equilibrium. Finally, use the purple triangle (diamond symbol) to shade the area representing producer surplus in equilibrium. Based on the previous graph, total surplus in the absence of international trade is . The following graph shows the same domestic demand and supply curves for soybeans in Colombia. Suppose that the Colombian government changes its international trade policy to allow free trade in soybeans. The horizontal black line (PWPW) represents the world…arrow_forward
- A small country is considering imposing a tariff on imported wine at the rate of $5 per bottle. Economists have estimated the following based on this tariff amount: World price of wine (free trade): $20 per bottle Domestic production (free trade): 500,000 bottles Domestic production (after tariff): 600,000 bottles Domestic consumption (free trade): 750,000 bottles Domestic consumption (after tariff): 650,000 bottles Draw a demand and supply curve for the country’s wine market to show the effects of the tariff. Find the change in consumer surplus, producer surplus, and government revenue resulting from the tariff.arrow_forward(Figure: Market for Pants) According to the figure, if there is international trade in this market, and the world price of a pair of pants is $40, the value of the consumer surplus isarrow_forwardThe following graph represents Canada's domestic supply and demand for coffee.Assume that Brazil is the only country producing and selling coffee in the world market. B) The government opens the market to free trade, and Brazil enters the market, pricingcoffee at $1 per pound. i. What will happen to the domestic price of coffee?ii. What will be the new domestic quantity supplied and domestic quantity demanded?iii. How much coffee will be imported from Brazil?arrow_forward
- The US, the domestic country, is currently operating a price of $14 per hammer. The US and China are not engaging in international trade. A new treaty is signed, and the world price and domestic price of the product are now $10 per unit. The US producers claim that this new treaty will harm them. The world price of hammers is $10 per hammer before and after the treaty. A. Calculate the consumer surplus before international trade is allowed. Show your work. A. Calculate the consumer surplus after international trade is allowed. Show your work. C. Will the producers in the domestic economy support or argue against opening up to international trade? Briefly explain and support your answer.arrow_forwardInternational trade can have big effects on domestic markets. For both an import good and an export good (in other words, address each bulleted item below twice—once for import and once for export), describe how opening up to international trade affects the following: supply or demand for the particular good, the competitiveness of that good’s market, and how the change in competitiveness affects equilibrium price and quantity. Stepping away from the import/export examples, describe how opening up to trade specifically affects a domestic monopoly. Include an explanation, using game theory, of how even a single additional competitor can lead to a market outcome similar to perfect competitionarrow_forward
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